The Stock Market That Can’t Go Down

One Sure Thing When it Comes to Investing (Really)

“Federal Reserve Cuts Interest Rates for Third Time in 2019”

–Headline, The NYT (10/30/19).

Let me see if I’ve got this straight:

If the economy is strong, corporate earnings are growing, unemployment low, etc. . . . the market goes up because the fundamentals are good.

However, if the fundamentals appear to weaken, the Fed steps in, either to lower interest rates — as they just did for a third time this year — or, if that doesn’t do the trick, by undertaking more aggressive action (see, “Quantitative Easing”).**

Then, the market goes up because of the Fed (stock market mavens will recognize this as “the Fed put”).

Bottom line: either way, the stock market goes up.

Sure thing, right?

Over a couple decades in the stock market, I’ve learned that there’s only one sure thing: “there’s no sure thing” (sorry).

**Stock market mavens will recognize this as “the Fed put.”



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